Loan-to-Value Ratio and Housing Price Cycle: Empirical Evidence From Indonesia

Lim, Chin Leng; Nugraheni, Siwi

doi:10.23917/jep.v18i2.4846

Cited by 4 publications

(3 citation statements)

References 26 publications

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“…The Preferences for Housing Loan Demand in Indonesia 135 and back to 80 percent in August 2016. This was done to maintain a stable housing market based on the condition of the Indonesian economy (Lim & Nugraheni, 2017).…”

Section: Literature Reviewmentioning

confidence: 99%

The Preferences for Housing Loan Demand in Indonesia Before and After the Loan-to-Value Policy Change

Ayuningtyas

2022

JEBIK

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The high price of houses causes a person to not be able to buy a home. The way that someone can own a house is by taking advantage of the credit offers provided by the bank. A mcroprudential policy needed that aims to overcome financial system instability, one of which is the policy on easing the loan-to-value (LTV) ratio for housing loans (KPR). The adjustment of LTV ratio aims to increase the potential demand for property, especially housing and household appliances, in line with an increase in the incomes of the lower middle class, and to control risks in the property sector. This study analyzes the impact of savings, loan interest rates, property sector NPLs, and the number of housing loans before and after a LTV policy revision. The data analysis used the Paired t-test, Wilcoxon signed-rank test, and multiple linear regression. The study results showed that there were differences between savings, loan interest rates, property sector NPLs, and the number of mortgages before and after a LTV policy change. Savings and NPLs in the property sector have no impact on the demand for housing loans while loan interest rates and LTV policy significantly affect the demand for housing loans.

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Section: Literature Reviewmentioning

confidence: 99%

The Preferences for Housing Loan Demand in Indonesia Before and After the Loan-to-Value Policy Change

Ayuningtyas

2022

JEBIK

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“…Loan to value : The loan-to-value (LTV) ratio is one principle assessment that uses in gauging financial leverage and weighing credit risk, this in which controls the availability of housing credit (Bian et al , 2018; Lim and Nugraheni, 2017; Rubio and Carrasco-Gallego, 2014). Henceforth, higher or tightening limits on the LTV ratio corresponds to higher housing price, as demand for housing increase due to the ease of availability credit (e.g.…”

Section: Literature Reviewmentioning

confidence: 99%

Residential property market in Malaysia: an analysis of price drivers and co-movements

Thaker

Ariff

Subramaniam

2020

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PurposeThe purpose of this paper is to identify the drivers of residential price as well as the degree co-movement of housing among different states in Malaysia.Design/methodology/approachThis study adopted an advanced econometrics technique: the dynamic autoregressive-distributed lag (DARDL) and – the time-frequency domain approach known as the wavelet coherence test. The DARDL model was applied to identify the cointegrating relationships and the CWT was used to analyze the co-movement and lead–lag relationships among four states’ regional housing prices. The extracted data were mainly on annual basis and comprised macroeconomics and financial factors. Information with regard to residential prices and other variables was extracted from the National Property Information Centre (NAPIC) website, the Central Bank of Malaysia Statistics Report, the Department of Statistics, Malaysia, I-Property.com and the World Bank (WB). The data covered in this study were the pool data from four main states in Malaysia and different categories of residential properties.FindingsThe empirical results indicate that there were long-run cointegration relationships between the housing price and capital gain and loss, rental per square feet, disposable income, inflation, number of marriages, deposit rate, risk premium and loan-to-value (LTV) ratio. While the wavelet analysis shows that (1) in the long run, Kuala Lumpur housing price having strong co-movement with Selangor, Penang and Melaka housing prices except for Johor and (2) the lead–lag relationship also postulates Kuala Lumpur housing price having in-phase category with Selangor, Penang and Melaka housing prices except for Johor.Practical implicationsThis study offers relevant practical implications. First, the study proposes an active collaboration between the private sector and government support which may help to smooth the pricing issue of residential properties. More low-cost residential projects are needed for focus groups including middle- and low-income earners. Furthermore, the results are expected to provide real estate investor in Malaysia, an improved understanding of the regional housing market price dynamics.Originality/valueThe findings of this study were obtained from various reliable sources; therefore, the results reflected the analysis of price drivers and co-movements. Furthermore, findings from this study lend some support to the argument on the rise of residential prices and offer several policy implications from a practical point of view with regard to the residential market.

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“…Moreover, the economic crisis due to a pandemic poses a direct risk of bad credit where customers cannot pay installments (Kristanto et al, 2020). One way to suppress bad loans is to limit the loan ratio (Lim & Nugraheni, 2017). In addition, MSMEs are also considering a simple loan application.…”

Section: Introductionmentioning

confidence: 99%

The Effect of Perceived Risk, Benefit, and Ease of Credit on Credit-Making Decisions Among MSMEs in Sragen Regency

Mustofa,

pamungkas,

Karima

et al. 2023

JICP

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Micro, Small, and Medium Enterprises (MSMEs) are essential to economic growth MSMEs are considered a new economic wheel that can encourage the regional economy to contribute to employment. This study aimed to examine the effect of perceived risk, benefits, and ease of credit on taking credit decision-making in MSMEs in the Sragen regency. Data were collected from as many as 153 respondents who are MSMEs in Sragen regency using a Likert scale questionnaire. The sampling technique used is random cluster sampling in each sub-district in Sragen regency. The data analysis includes assumption, multiple linear regression, and hypothesis testing (t-test and F-test). The research results show that the perception of risk, the perception of benefits, and the ease of credit significantly affect the credit-making decisions of MSME actors in the Sragen regency. This research implies that capital providers need to pay attention to the public’s view of the risks, benefits, and convenience of credit by socializing, being more responsive and informative about criticism and suggestions, and providing solutions for MSMEs with financial problems.

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Loan-to-Value Ratio and Housing Price Cycle: Empirical Evidence From Indonesia

Cited by 4 publications

References 26 publications

The Preferences for Housing Loan Demand in Indonesia Before and After the Loan-to-Value Policy Change

The Preferences for Housing Loan Demand in Indonesia Before and After the Loan-to-Value Policy Change

Residential property market in Malaysia: an analysis of price drivers and co-movements

The Effect of Perceived Risk, Benefit, and Ease of Credit on Credit-Making Decisions Among MSMEs in Sragen Regency

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